Credit cards have increasingly become a part of everyday life, according Mastercard reports that as of 2020, they have more than 100 million customers in Sub-Saharan Africa. While this is still below their target of 500 million, it shows how more people in the region are getting used to no longer using cash alone for transactions.
Many people see credit cards as an obligation, but if used wisely, there are actually many benefits to using them. Here are some ways you can use a credit card to your advantage:
1. Use only one card
Once you’re approved for your first card, you might be tempted to apply for more, but this isn’t a good idea. Having just one credit card makes your spending more manageable and prevents you from exceeding the budget.
It also helps you keep track of how much you actually owe and reduces the chances of you forgetting to pay different bills. This will help you save money in the sense that it prevents you from being tempted to spend more than you initially intended.
2. Have a clear spending limit
The same article also notes that it is important to have established a clear spending limit and automate it if possible. In this way, it will be impossible for you to go above your means, which is a problem that happens to many new credit card users when they receive their first card.
Often, limits are set by the bank with your application, so always keep them in mind to avoid problems. Doing so can help you be more aware of how much you’re spending and you’ll be able to make fewer purchases.
3. Ensure good creditworthiness
For those who want to build good credit, a credit card is one of the most effective ways to do so. A feature on credit scores describes how it can affect many financial aspects of your future life, such as applying for utilities, renting real estate, and even signing up for insurance.
Good credit scores are highly valued in many different countries, so it’s important to try to get a good score if you want to move abroad. You can do this by paying your dues on time and always staying informed of your bills. If you ever want to take out a loan, a good score is necessary to get approved for lower rates so that you can save more in the long run.
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4. Spend to earn perks and rewards
For those who like to travel or buy shopping items, using a card can have many advantages. CNBC writes that many institutions have a points system that allows you to collect rewards by making purchases.
These points can then be converted into practical applications, such as airline miles, discounts at certain stores and even cashback percentages. The more you spend with your card, the more benefits you can receive from your provider. Just make sure you only spend money that you know you can repay.
5. Take advantage of price adjustments
One benefit of using a credit card that not many people are aware of is the terms regarding price adjustments. Certain companies have clauses in their contracts stating that if you bought something at full price but shortly after you saw it at a discount, you can request a refund for the amount you could have saved on.
A list on Forbes regarding several providers that license this includes Capital One and UBS. Be sure to read the terms and agreements thoroughly to see if you qualify for this benefit and what requirements your bank needs. This will help you save in times you could have spent less.
Always consider the pros and cons of this before applying for a credit card. Determine if it’s right for you and understand the risks. Pay your balance in full and on time to avoid any overdue fines.
If used properly, credit cards can help you save money in many different ways. Make sure you always use benefits and benefits to your advantage so you can get the most out of them.